Correlation Between Daewoo Electronic and Jin Air
Can any of the company-specific risk be diversified away by investing in both Daewoo Electronic and Jin Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Daewoo Electronic and Jin Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo Electronic Components and Jin Air Co, you can compare the effects of market volatilities on Daewoo Electronic and Jin Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Daewoo Electronic with a short position of Jin Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo Electronic and Jin Air.
Diversification Opportunities for Daewoo Electronic and Jin Air
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daewoo and Jin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo Electronic Components and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air and Daewoo Electronic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Daewoo Electronic Components are associated (or correlated) with Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Daewoo Electronic i.e., Daewoo Electronic and Jin Air go up and down completely randomly.
Pair Corralation between Daewoo Electronic and Jin Air
Assuming the 90 days trading horizon Daewoo Electronic Components is expected to generate 0.65 times more return on investment than Jin Air. However, Daewoo Electronic Components is 1.53 times less risky than Jin Air. It trades about -0.08 of its potential returns per unit of risk. Jin Air Co is currently generating about -0.1 per unit of risk. If you would invest 111,300 in Daewoo Electronic Components on November 6, 2024 and sell it today you would lose (10,400) from holding Daewoo Electronic Components or give up 9.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo Electronic Components vs. Jin Air Co
Performance |
| Timeline |
| Daewoo Electronic |
| Jin Air |
Daewoo Electronic and Jin Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo Electronic and Jin Air
The main advantage of trading using opposite Daewoo Electronic and Jin Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo Electronic position performs unexpectedly, Jin Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Jin Air will offset losses from the drop in Jin Air's long position.| Daewoo Electronic vs. Asiana Airlines | Daewoo Electronic vs. ENF Technology Co | Daewoo Electronic vs. Guyoung Technology Co | Daewoo Electronic vs. Hwangkum Steel Technology |
| Jin Air vs. Seers Technology | Jin Air vs. SK Chemicals Co | Jin Air vs. Ilji Technology Co | Jin Air vs. Guyoung Technology Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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